The deal announced yesterday, whereby fertilizers company Israel Chemicals Ltd. (TASE: ICL), controlled by Israel Corporation (TASE: ILCO) bought the stake of Brazilian fertilizers giant Vale in Fosbrasil is estimated to be worth tens of millions of dollars. This acquisition follows closely on the deal announced last week, estimated at $60 million, whereby Israel Chemicals bought Hagesud, a German producer of spice blends and food ingredients for meat processing.
In the past eight years, Israel Chemicals has acquired several companies that produce phosphate-based products for the food market. According to market estimates, the company has spent NIS 4 billion on these acquisitions. In 2013 alone, Israel Chemicals made acquisitions to the tune of some $200 million (NIS 700 million). Among the larger acquisitions that the company has made in the past are fertilizer manufacturer Everris (formerly Scotts Professional) in 2011 for $270 million; Supresta, a producer of phosphorus based flame retardants, in 2007 for $350 million, and Astaris, a US producer of phosphate salts, in 2005 for $225 million.
Commenting on yesterday's announcement, ICL Performance Products president and CEO Mark Volmer said, “This acquisition complements ICL’s global position in phosphoric acid and phosphates. It is the next step in the global expansion strategy that we have been following for the past decade, carrying out complementary acquisitions that have transformed our company into a rapidly-growing major global player in the essential needs areas of food, engineered materials, and agriculture.”
The two acquisitions by Israel Chemicals in the past week come after it announced a $275 million private placement of bonds with US investment institutions last month. This move, mainly designed to diversify the company's sources of credit and reduce its financial dependence on the local market, is part of the implementation of the global strategy, in furtherance of which the company will dual list its shares on the New York Stock Exchange.
These latest moves by Israel Chemicals come against a backdrop of changes in the global phosphate market in the past few months and the start of the deliberations of the Sheshinski 2 committee, which is examining the amount of royalties that the company pays the state.
Israel Chemicals posted a profit of $196 million in the third quarter of 2013, 50% less than in the corresponding quarter of 2012.
Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013